Whole Foods discontinuing value-focused 365 store concept

Friday

Whole Foods Market is going to discontinue its smaller, value-based 365-brand concept stores, according to an internal memo from CEO John Mackey obtained Friday.

In the memo, Mackey said the grocery chain will continue to operate its 12 existing 365-brand stores but will not open any new stores, and that employees of those stores will see no change.

“As we have been consistently lowering prices in our Whole Foods Market stores over the past year, the price distinction between the two brands has become less relevant,” Mackey said. “We believe that the price gap will further diminish.”

The decision means that Whole Foods, which is based in Austin, Texas, and has been owned by online retailer Amazon since August 2017, is backing away from an initiative it started just three years ago, when it premiered 365 stores as a cheaper, smaller alternative to its regular stores.

Whole Foods said then that prices would be more cost-friendly at the stores because many products sold would be under its private label 365 by Whole Foods brand. At the time, Whole Foods was amid a downturn in business and consistently feeling pressure from its “Whole Paycheck” image.

Since Amazon took over Whole Foods less than two years ago, the Austin grocer has seen several changes.

While price checks by the Austin American-Statesman and other research firms have shown overall costs have mostly remained the same, Whole Foods has connected its Amazon Prime rewards system to the chain and also lowered prices on some items. It’s also started a curbside and grocery delivery service and integrated both companies’ websites and operations. Since the merger, the grocer has also promoted more of its 365 brand at regular stores.

In total, Whole Foods has more than 490 stores across the United States, Canada and the United Kingdom and employs about 89,000 people.

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